Council OKs incentives to lure solar firm

Nexolon America is in negotiations with the Brooks Development Authority to locate a manufacturing plant and U.S. headquarters at Brooks City-Base on the Southeast Side.

Despite protests from a vocal few, the majority of the City Council agreed Thursday on the importance of offering a hefty incentive package to Nexolon America, a solar-panel maker, so it would locate a factory and its national headquarters at Brooks City-Base.

Nexolon will fabricate the solar panels needed by OCI Solar Power, which also received an economic development grant from the city Thursday, in its deal with CPS Energy to provide the utility with 400 megawatts of solar power — enough to power about 70,000 homes.

“San Antonio is making tremendous strides in becoming a leader in the new-energy economy, and the OCI Solar-CPS Energy deal is an important component of our progress,” Mayor Julián Castro said. “This Nexelon agreement gets us a long way toward ensuring that the CPS Energy agreement with OCI can be fulfilled.”

Under CPS Energy's power-purchase agreement — a significant economic development project — OCI Solar Power and its partners must invest at least $100 million in capital expenditures, locate their headquarters here and create at least 800 permanent jobs in the utility's service area, which covers all of Bexar County and parts of adjacent counties.

San Antonio leaders, however, want to ensure those jobs are within the city, not just within CPS' service area. By incentivizing development at Brooks City-Base, the city also addresses another priority: to spur growth on the former Air Force facility.

During negotiations, the city always emphasized Brooks as a good location for Nexolon, which also entertained other potential locations — both in and outside of the city limits — sources close to the deal say.

Nexolon expects to spend $115 million on facilities and personal property at Brooks.

On top of the city's basic incentive package that includes a 10-year tax abatement on personal property, a $400,000 grant and $500,000 in fee waivers from the San Antonio Water System, the council pledged the city's “best efforts to provide $12 million in future funding for public infrastructure improvements” at Brooks.

The $12 million represents the gap between the $5 million Nexolon is willing to pay for the 86 acres and $17 million, the amount the Brooks Development Authority has determined as the property's market value.

Under its business plan, the development authority must get fair value for its property, officials said. The $12 million in infrastructure funding will allow Brooks to be “made whole,” officials said, while also better preparing the campus for future development. And it makes the deal palatable for a company with 400 new jobs.

That funding — which will come from increased CPS Energy revenue created by Nexolon and future bond money — will primarily pay for infrastructure improvements that will prepare the Brooks campus for future development that leaders expect to follow the Nexolon project.

After its $5 million up-front payment, Nexolon — which has maintained that it eventually wanted to own the property — will have the option to take ownership any time during the next decade.

Williams told his colleagues on the dais that he was bothered by that element in particular.

“For $5 million, they will control the land that's valued at $17 million,” he said.

If it takes over ownership of the land, Nexolon could use it as collateral on a loan it will take to build its facility. But it will also have to pay property taxes on the land. Those taxes don't exist, however, as long as ownership remains with the Brooks Development Authority.

Councilman Diego Bernal, whose District 1 is several miles from Brooks, defended the incentive package that he says will spur further development at a former military base that for 20 years hasn't drawn much interest.

“What this project is, for me, it's about 400 jobs and potentially 800 jobs because of the additional investment it can make,” Bernal said. “The $12 million, to me in my year and a half (on council) looks a lot like a bond project. And I can't recall a bond project in our past bond, or the bond before that, that resulted in 800 jobs. It's absolutely worth it.”

Castro said conventional wisdom a decade ago was that the South Side wouldn't grow. But Brooks City-Base is “bucking that trend,” he said, comparing the former base to lemons and the development authority's successful attempt at making lemonade.

Castro said he believes the Nexolon project will be the foundation of an explosion of growth on the South Side.

“These are principally manufacturing and headquarters jobs. It must be said that the manufacturing jobs are good-paying jobs,” he said. “Manufacturing jobs are generally the gold standard of job creation because their economic impact, the multiplier effect, is stronger than most other types of jobs.

“What we have in front of us is a great opportunity to create 404 good-paying jobs for our community. That needs to be the focus of this council. Our concern must be for the entire city.”